Pivotal Initiates Buy Rating on Google and Meta Stocks

Pivotal Research Group has begun coverage of Alphabet, the parent company of Google, with a Buy rating, emphasizing the firm’s strong competitive position and growth potential in cloud computing and artificial intelligence (AI).

Google commands approximately 90% of the global search market share outside of China. The company’s dominance extends to video and audio streaming through YouTube and its leading web browser, Chrome.

In August, Google’s search business was classified as a monopoly, and the Department of Justice, along with a judge, are currently considering remedies that could significantly alter the company’s ability to utilize its market position.

Despite these challenges, Pivotal believes that Google’s valuation currently reflects conservative estimates regarding search revenue declines post-2027. While potential regulatory resolutions may not arise promptly, Pivotal speculates that a win for Kamala Harris could result in more favorable agreements for Google.

In a separate report, Pivotal has also initiated coverage of Meta Platforms with a Buy rating, projecting a year-end target price of $780 for 2025.

Meta is recognized for its wide-ranging social media platforms, including Facebook, WhatsApp, and Instagram, and is noted for its management’s capacity to innovate and adapt to competition.

Pivotal analysts expressed optimism for Meta’s revenue growth prospects stemming from increased usage, new products, enhanced targeting, and higher prices supported by cost efficiencies enabled by AI. They also anticipate a reduction in losses from the Reality Labs division, alongside what they view as an attractive valuation based on earnings per share for 2025.

While acknowledging risks from potential regulation, market dominance investigations, and competition from Google and Apple in the realm of AI, Pivotal remains confident that Meta’s strengths, such as its proactive management and appealing valuation, outweigh the associated risks.